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More than a feeling: What role does gut instinct play in real estate investing?

by Sian Sinclair

How do you make big decisions? Do you study the data, or are you more likely to go with instinct and past experiences? Maybe it depends on the size of the decision. When it comes to multimillion-dollar real estate investments, surely investors dismiss instinct in favor of more thorough, reasoned analysis.

Think again. We might not admit it openly — indeed, we might not be completely aware of it. But evidence suggests, alongside rational analysis, a significant proportion of cross-border investment decisions are made on the basis of gut instinct. In other words, investors are choosing the option that “just feels right.”

What does that mean for the global real estate investment market, and what are the factors driving decision making in this fast-changing sector? Can limiting the decision-making process to instinct or gut feel mean unconscious bias is filtering out new pockets of opportunity? And, if so, what can investors do to overcome this?